CS FOR SENATE BILL NO. 282(L&C) "An Act extending the termination dates of certain activities and salmon marketing programs of the Alaska Seafood Marketing Institute and of the salmon marketing tax; expanding the allowable use of that tax for the salmon marketing programs of the Alaska Seafood Marketing Institute; relating to the Alaska Seafood Marketing Institute's salmon marketing committee; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. SENATOR BEN STEVENS, sponsor, testified this legislation extends the termination date of the one-percent salmon tax to the year 2008 and permits the revenue to be used in current Alaska Seafood Marketing Institute (ASMI) programs. He informed this would be the second extension of this tax since its enactment in 1993. Senator Stevens told how ASMI uses the funds to promote the quality and "superiority" of Alaskan seafood products and to increase world consumption. He emphasized this is the only generic program in Alaska to promote all Alaska's seafood products in the global protein market. Senator Ward asked if "niche" marketing is necessary to focus on certain fisheries, such as the Copper River sockeye salmon. Senator Stevens replied the "brand marketing program" debate has been ongoing in ASMI but that the organization continues to operate as a generic marketing program. He expressed that to allocate funding to regional efforts would dilute the overall efforts. Senator Ward stated this legislation may not be the entity to begin these efforts, but shared that Cook Inlet fisherman have requested a portion of the salmon tax be utilized to market their catch. Senator Olson asked about the opinions from within the industry regarding continuation of the one-percent tax. Senator Stevens relayed the ASMI Board favors the extension and that no testimony heard on this bill in the Senate Labor and Commerce Committee opposed elimination of ASMI. He qualified there are some concerns that have always been present. Senator Green noted the sponsor statement references the One- Percent Domestic Salmon Marketing Tax and asked if this is the official name. Senator Stevens affirmed this is the official name although this legislation would change the name to the Salmon Marketing Tax. BRUCE SCHACTLER, Commercial salmon fisherman, At-Large Member, Board of Directors, United Fishermen of Alaska, and President, United Salmon Association, testified via teleconference from Kodiak about a perceived rush to pass this legislation. He stated he does not oppose using a portion of the tax revenue for foreign marketing efforts; however, the tax originally gained approval in part from a promise that the funds would be expended solely to develop the domestic market and the matter should be discussed before such changes are made. He also encouraged further consideration of expending funds for lobbying efforts in Washington DC to address farmed salmon and foreign competition. CHRIS BERNS testified via teleconference from Kodiak that he has fished since 1970 and he supported the one-percent industry tax and had lobbied for its implementation in 1993 based on the assumption that it would be used for domestic marketing. He stated that the United States is the primary market for farmed salmon. While he did not oppose "giving flexibility" to the ASMI marketing committee to expend funds for foreign marketing, he asserted, "foreign markets are just a big giant hole" and past efforts have been ineffective. He suggested giving this legislation further consideration as the current extension does not expire until the following year. SFC 02 # 24, Side B 10:00 AM Mr. Berns continued that the salmon industry is the only seafood producer in the state to pay a tax for the marketing efforts. He did not see any benefit for himself from this tax. Co-Chair Kelly asked Senator Stevens to address the comments. Senator Stevens addressed Mr. Schactler's comments regarding utilizing funds to lobby in the nation's capital. Senator Stevens noted this was discussed but not incorporated in the legislation, as the United Salmon Association was the only organization in support of the plan and because it was determined this was not the best use of the funds given the limited amount available. He also noted this legislation is not being rushed and that most of Mr. Schactler's concerns were addressed at the Senate Labor and Commerce Committee. He stated the extension date is being implemented one year earlier to allow ASMI to make long-term plans. Senator Ward understood one witness suggested that a subcommittee of the proposed salmon task could address the concerns raised. He asked the sponsor's opinion. Senator Stevens responded ASMI needs stability to allow it to plan for the future. He expressed there is uncertainty as to the results of the task force and therefore ASMI should not be dependant on its outcome. Senator Stevens referenced the statement that the salmon industry is the only seafood industry paying a tax. He pointed out that processors pay a .3 percent tax for all seafood products. Senator Austerman supported reauthorizing ASMI during this legislative session because of the time lapse involved in planning efforts. He suggested the task force could review the issues and if it recommended, the extension could be repealed. SUE ASPELUND, Executive Director, Cordova Fisherman United, spoke to the knowledge of the organization and the full support of continuation of the one-percent tax. She relayed support for lifting the restrictions against foreign marketing. She stressed the importance of seafood marketing and preferred funding marketing versus lobbying efforts. BARBARA BELKNAP, Executive Director, Alaska Seafood Marketing Institute, testified in Juneau to respond to witness statements. She told of the history and diversity of representation on the board. She stated that the board of directors supports removal of the domestic marketing limitation, and that the issue of lobbying was not addressed during the previous board meeting. She stressed ASMI is not a trade organization. She spoke to the disadvantages of lobbying, as any standpoint the agency lobbies in support of would meet opposition from other entities the agency represents. She told of the Salmon Marketing Committee that oversees the expenditure of the marketing funds. She mentioned difficulties incurred the previous time ASMI was due for reauthorization as commitments could not be made until continuance of the program was guaranteed. JERRY MCCUNE, United Fishermen of Alaska, testified in Juneau, about the 29 groups represented by the organization, which supports the committee substitute and international marketing. He noted the original intent of the tax was to focus marketing on the domestic market, which he stated has occurred. However, he noted new international markets are emerging for generic salmon. KATHY HANSON, Executive Director, Southeast Alaska Fishermen's Alliance testified in Juneau in support of the renewal of ASMI and the importance of renewing this year rather then waiting until the term expires. She stated that removing the restrictions related to international marketing would be beneficial, noting that most of the funds would continued to be used for domestic marketing although ASMI should have flexibility to take advantage of the international market. She spoke of ASMI successes in using funds to leverage additional funds. Ms. Hanson addressed changing the number of members on the ASMI board. She stated the organization was unable to reach consensus. She relayed some of the arguments in favor and opposition. AT EASE 10:17 AM / 10:19 AM Senator Austerman emphasized this bill must be adopted this year. He informed that the original version of the bill maintained the domestic marketing restrictions and it reduced the number of members on the board. He relayed that productive debate occurred in the Senate Labor and Commerce Committee about these issues as well as the potential for utilizing a portion of the tax revenues for lobbying efforts. He stated his opinion is that the domestic marketing restriction should remain as it weakens the program. He shared that he had made the suggestion to expend some of the tax revenues for lobbying efforts, but withdrew after hearing arguments against the proposal. He expressed he would not offer an amendment to the committee substitute, citing that "the industry has spoken". Co-Chair Kelly noted Co-Chair Donley had questions regarding the fiscal note and requested he consult with the sponsor. Co-Chair Kelly ordered the bill HELD in Committee. AT EASE 10:21 AM / 10:32 AM